One of the big losers of 2018 remains “expensive”

A combination of falling oil prices, trade tensions, higher interest rates in the U.S. and a stronger U.S. dollar have weighed on the Canadian dollar. (Jonathan Hayward/The Canadian Press)

According to experts, Loonie, is one of the big losers of 2018, is still “expensive”. And it is that the Canadian dollar had a fall of almost 8% against the dollar last year and lost almost 6% in the last quarter.

Likewise, after its fall of almost eight percent against its US counterpart last year, this worsened. Being that after its fall in the fourth quarter worsened, falling almost six percent since October.

It is necessary to highlight that the Canadian dollar was the second main currency with the worst performance in the world against the US dollar in the last quarter. Exactly behind another basic currency, the Norwegian crown, according to the CIBC.

Undoubtedly, the Canadian dollar has been affected by a combination of several factors. As well as the fall in oil prices, commercial tensions, in addition to the higher interest rates in the United States and a stronger US dollar.

Important data

It should be noted that for the stock markets, the year starts on the unstable ground after the large and significant losses in 2018

For its part, the loonie started 2019 up, rising more than 1% to around 74 US cents. Despite this, analysts say it is difficult to predict if things will change for the currency this year.

A fact to highlight is that according to the latest data from Statistics Canada it has been shown that foreign investment in Canadian securities fell to $ 4 billion in October, compared to $ 7.8 billion in September.

There are those who believe that the dollar should be further weakened in the long term so that non-energy exports, such as manufacturing, become more competitive. As well as the fact that Canada, like the United States, depends to a large extent on the external financing of foreign investors for its current account deficit.

Bipan Rai, who is head of North America’s currency exchange strategy at CIBC Capital Markets, said, “The non-energy trade balance is still in the red, and with an uncertain outlook for consumption and investment, the Canadian dollar must become cheaper to push forward competitiveness in the future” also add, “The withdrawal of liquidity in course leaves Canada vulnerable and implies that the Canadian dollar should be weakened”.